We have been having a bad summer! The Nepalese have face-palmed us, the Chinese have taken our territory and let not forget the Covid crisis. Now Donald Trump has dealt a blow to thousands aspiring for a career in the US.
The US administration extended the 60-day ban on immigration and non-immigrant worker visas till the end of 2020. Popular work visas including the much-coveted H-1B and H-2B, and certain categories of H-4, J, and L visas would also remain suspended until December 31.
Apart from the suspension of these work visas, the executive order signed by Trump has also made sweeping changes to the H-1B work visa norms, which will no longer be decided by the currently prevalent lottery system. The new norms will now favour highly-skilled workers who are paid the highest wages by their respective companies.
What are H-1B, H-2B, L and other work visas?
- In order to fill a vacuum of highly-skilled low-cost employees in IT and other related domains, the US administration issues a certain number of visas each year which allows companies from outside the US to send employees to work on client sites.
- Of these work visas, the H-1B remains the most popular among Indian IT companies.
- The US government has a cap of 85,000 total H-1B visas for each year.
Here are the visas that have been put on hold till December 2020:
1) H-1B visa
What is it: The H-1B visa category covers individuals who “work in a speciality occupation, engage in cooperative research and development projects administered by the US Department of Defense or are fashion models that have national or international acclaim and recognition.”
Who’s covered: The H-1B is most well known as a visa for skilled tech workers, but other industries, like health care and the media, also use these visas.
2) H-2B visa
What it is: According to USCIS, the H-2B program allows US employers or agents “to bring foreign nationals to the United States to fill temporary non-agricultural jobs.”
Who’s covered: They generally apply to seasonal workers in industries like landscaping, forestry, hospitality and construction.
3) J-1 visa
What it is: The J-1 visa is an exchange visitor visa for individuals approved to participate in work-and-study-based exchange visitor programs in the United States.
Who’s covered: The impacted people include interns, trainees, teachers, camp counsellors, au pairs and participants in summer work travel programs.
4) L-1 visa
What it is: The L1 Visa is reserved for managerial or executive professionals transferring to the US from within the same company, or a subsidiary of it. The L1 Visa can also be used for a foreign company opening up US operations.
Who’s covered: Within the L1 Visa, there are two subsidiary types of visas
- L1A visa for managers and executives.
- L1B visa for those with specialized knowledge.
The story of work visas
- The 1952 scheme: Since it was started in 1952, the H-1 visa scheme has undergone many changes and revisions to allow or disallow certain categories of skilled workers in the US, depending on the economic situation of the country.
- Harnessing the technology boom: The technology boom coupled with the arrival of the internet and low-cost computers in developing nations such as India and China saw a large number of graduates willing to work at relatively low costs in the US.
- This is often the win-win situation for both the employer in the US and the employee.
- Bypassing Americans: However, it has since often been criticised for sending low-cost workers to the US at the expense of domestic workers.
Trumps in ‘The Protectionism’
- Donald Trump coming to power: In January 2017, after taking over as the president of the US, Trump had hinted that the low-cost workers were hampering the economy and undercutting jobs of citizens.
- Delivering election vendetta: The US had then hinted at reforming the “broken” H-1B visa system.
- COVID uncertainties: Trump seized the opportunity provided by the economic contraction due to Covid-19 by first banning the entry of non-immigrant workers till June 23, and then extending it till December 31.
- Sudden unemployment: The White House reasoned that the ongoing pandemic has “significantly disrupted Americans’ livelihoods”, to the extent that the overall unemployment rate quadrupled between February and May 2020 to a little over 13%.
Motive behind the visa ban
- Breaking the chain: The ban implies that U.S. firms or others with U.S. operations who rely on skilled foreign nationals working in the U.S. will be unable to make new hires as long as the ban stands.
- Looming slowdown: Many firms are unlikely to do any hiring at this economically depressed time.
- Upcoming elections’ agenda: As per popular opinion, this is a method by the US President to reach out to the voter base.
- Yet again- ‘America first’: Trump would take all moves to build political capital in the name of the “America First” mantra — a foregone conclusion given his outspokenness on the subject to date.
Who all does it impact?
- The visa ban means those who do not have a valid non-immigrant visa as of June 23 and are outside of the US, will not be allowed to enter the country until December 31.
- Workers in essential services in the food sector have been given some reprieve, and their entry shall be decided by the consular officer of immigration services.
- H-1B, H-2B, J and L visa holders, and their spouse or children already present in the US shall not be impacted by the new worker visa ban.
- H-1B visas are generally approved for a period of three years for a person, but many visa holders change employers to extend their US stay.
- Foreign nationals outside the US, who were to begin work on an H-1B visa or even L-1 visas (intra-company transfer) – but do not as yet hold a valid visa, as well as dependents who were to accompany them (be it spouses or dependent children) will have to wait longer, till the ban expires.
Will Indian corporations be hit?
This visa ban come at a crucial inflexion point for the Indian economy when restrictions on the movement of people and goods slowly will be lifted after India passes its peak viral case numbers. This would create a knock-on effect from IT to other sectors.
1) IT sector
- Indian IT companies are amongst the biggest beneficiaries of the US H-1B visa regime and have since the 1990s cornered a lion’s share of the total number of visas issued each year.
- As of April 1, 2020, the US Citizenship and Immigration Services (USCIS) had received about 2.5 lakh H-1B work visa applications, according to official data.
- Indians had applied for as many as 1.84 lakh or 67 per cent of the total H-1B work visas for the current financial year ending March 2021.
- India’s IT services exports to the U.S., which depend significantly on the H-1B visa, have been an important constituent element of bilateral economic trade.
- Though the large Indian IT companies have cut down their dependency on H-1B and other worker visas by hiring as much as 50 per cent of staff locally, they still rely on these visas to keep costs in check.
2) Highly skilled workers
- Favouring highest-paid worker could result in a significant impact on margins and worker wages of Indian IT companies which send thousands of low-cost employees to work on client sites in the US.
- This, in turn, impacts their remuneration in the long term.
Silver lining
- Newer opportunities for Indian high skilled workers in the IT sector in other countries outside of the US will be explored after this ban.
- H1B1 has drawn away from the best talent from India for decades. This move may cause reverse brain gain for better growth of the Indian tech industry.
- These would in turn benefit innovation, R&D for nurturing the growing start-up sector in India.
- Most of the companies have become capable of handling their work remotely in the wake of the COVID-19 pandemic. This has provided resilience to the Indian tech sector against international mobility restrictions.
- With this ban, already employed skilled workers from India may get higher salaries which in turn would increase the inflow of remittances.
Criticism within the US
- Google CEO Sunder Pichai has expressed disappointment over the proclamation, and said he would stand with immigrants and work to expand opportunity for all.
- He said that immigration has contributed immensely to America’s economic success, making it a global leader in tech, and also Google the company it is today.
- The ban on issuing visas will harm employers, families, universities, hospitals, communities, and delay America’s economic recovery.
Impact on bilateral ties
- An internal matter for the US: The freezing of non-immigration work visas is more of a US election-related issue rather than an indication of any mutual problems between India and the US.
- India & the US share global strategic partnership, based on shared democratic values and similarity of interests on bilateral, regional and global issues.
- However despite this strong bond and despite hectic talks at diplomatic levels between India and the US, the Trump administration decided in favour of implementing the ban.
- The issue becomes a sensitive one as US cooperation becomes strategically necessary for India amid its border tensions and skirmishes with China.
Way Forward
- For its benefits, the US should amend the H-1B programme, not end it.
- Immigrants have played a crucial role in making the USA a global leader in cutting edge technology.
- Suspending the visas will only weaken the USA’s economy and its health care workforce at a time when there is a need to strengthen both.
- Politics should not trump smart policy and the ingenuity of migrant workers should be harnessed to revive an economy in dire straits.
Conclusion
- India needs to keep the US on its side for strategic and security reasons.
- But the immediate future of the relationship depends on the upcoming US presidential elections.
- If India-US relationship is a defining one for this century, as PM Modi has said, the visa ban decision should not let this sour in.
- Lastly, we can conclude that the US has maligned its image of being the global ambassador of Liberalism.
References
https://indianexpress.com/article/explained/us-h1b-visa-suspension-india-it-companies-6471966/
https://www.theweek.in/news/biz-tech/2020/06/23/how-will-trump-H1B-visa-ban-affect-indians.html
Amazing overview of the topic. A holistic one!
Thanks Shantanu!